What do you put for Actual Cost for the Project at work when there is no money actually spent ?

Question

If you want to work with EVM, so you need to get EV, PV and AC, and you are working in a company that does not record the actual cost of the project.

As per my understaing that all such values are money values. I can find the equivalent for EV and PV, but I cannot find what value to use for AC in case we are not spending money directly on the project, since we are employed and the company is paying our salaries.

So, how do we calculate AC in this case?

Tarek.

Answer 1

Does the project have a budget? It must have a budget, otherwise your company is not really doing project management.

Usually, in your project schedule, you estimate the costs based on your budget unit (see: http://www.projectmanagementquestions.com/2948/what-is-a-budget-unit ). The budget unit is typically an hour.

Let's assume that only one resource is working on the project, and his hourly rate is $50. Let's also assume there are no other direct costs associated with the project, so at any point in time you can calculate the AC (Actual Cost) of the project by multiplying the resource's hourly rate by the number of hours he has spent working on the project so far.

So, if this resource spent 100 hours working on the project, then AC = $50  x 100 = $5,000

Note that you have to multiple the rate by the actual number of hours spent.

Comments

Ok, clear. In our case, we are developing software and programs to support the business such as developing the Leave Form Workflow Process. My manager or the end-user tells me that I must finish the project in say 3 weeks. I can take 3 weeks and the estimated number of working hours, times hourly rate as the Budget ?
Usually, I take the time provided by the user as a constraint that may affect the scope, and I work on another more reasonable estimate as per the requirements. In such case, deciding what is a "budget" for the project becomes a real challenge, right ?

What is the Budget in such cases ?

The only time I hear the work "Budget" in our case is at the beginning of the year. We submit the budget reuqirements for our department for Software Tools, Support Contracts ...etc.

---

I think you're working in a strictly functional organization, and that's why projects are undertaken while not really following a project management process. I think as a project manager you also report to your functional manager if I'm not mistaken.

Honestly, you don't need to develop a budget in your situation because nobody will care about it. But if you insist on doing so, then you only have to multiply the hourly rate by the number of hours spent in those 3 weeks working on the project.